Is It Really Darkest Before the Dawn?

An unrelenting stream of bad news continues to batter the economy. The first advance estimate for GDP growth for the fourth quarter of 2008 was a miserable -3.8% on an annualized basis. US Pres Obama prefers to focus on jobs as the metric of choice to illustrate economic calamity. The author thinks...

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Bibliographic Details
Published in:Journal of Financial Planning 2009-04, Vol.22 (4), p.32
Main Author: Riepe, Mark W
Format: Article
Language:English
Subjects:
GDP
Gross Domestic Product
Growth rate
Investment policy
Securities markets
Online Access:Get full text
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Summary:An unrelenting stream of bad news continues to batter the economy. The first advance estimate for GDP growth for the fourth quarter of 2008 was a miserable -3.8% on an annualized basis. US Pres Obama prefers to focus on jobs as the metric of choice to illustrate economic calamity. The author thinks that broad-based stock market exposure has relevance in this environment for investors, and for this column the author decided to see if any light could be shed on how the US stock market has performed following a low point in the economy. To keep the analysis simple, the author defines the low point of the economy as the quarter in which GDP performed worst from past recessions in the post-WWII period. The bottom line is that it does appear to be darkest before the dawn, but turning that insight into a viable investing strategy under real-world conditions is difficult to pull off.
ISSN:1040-3981